Thursday, January 23, 2014

Lucky with Leverage in Apple

CCI set out to re-establish a long/short option position in Apple as done with this and other stocks in the past.  CCI planned to buy a deep ITM call leap position in Apple  (APPL) before next weeks earnings, and to somewhat hedge that position by selling short term calls against that long position.

This morning CCI
  • Bought  Jan 15 $400 Call for $150
  • Sold Jan 31, 14 $580 call for $4
The intent was to hold this position through next weeks earnings, and some of the noise created by Carl Ichan's activism in Apple.  As it turns out,  CCI "brilliantly" (aka: luckily)  caught the bottom of today's Apple trading range.  By late in the afternoon, Apple had reversed and traded up by 1.5% from the time of purchase.   CCI just took quick profits by the following transaction
  • Sold Jan 15 $400 call for $156.50
  • Bought Jan 31, 14 call for $5
That is a gain of $5.50 per contract or a nice 3+% gain in a few hours.

CCI may look to re-establish the original  position in the near future, especially if Apple sells off going into their earnings announcement. .

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